Wingo v. Celotex Corp.
| Decision Date | 24 November 1987 |
| Docket Number | No. 86-1232,86-1232 |
| Parties | 5 UCC Rep.Serv.2d 309 Cecil S. WINGO, Sr., Plaintiff, v. The CELOTEX CORPORATION, Defendant-Appellant, Norfolk & Western Railway Company, Defendant-Appellee. and KEENE CORPORATION; GAF Corporation; Garlock Inc.; Nicolet Inc; Southern Textile Corporation; H.K. Porter, Inc; American Optical Co; Auto Spring & Bearing Company, and its Successor in interest to Johnson Enterprises, Inc.; Babcock & Wilcox Co; Blue Ridge Talc Co., Inc.; Certain Teed Corporation; Crane Co; General Electric Company; Goodyear Tire & Rubber Co.; Graybar Electric Co; Koppers Co; WEM Inc; Westinghouse Electric Corporation; Acme Manufacturing & Casket Co.; Anchor Packing Co; Atlas Turner, Inc.; Dana Corporation; E.A. Kinsey Co.; Earl B. Beach Co., Defendants, v. JOHNSON ENTERPRISES, INC.; National Asbestos Co.; TNT Liquidating Co.; Tannetics, Inc.; U.S. Gypsum; Uniroyal, Inc.; Vellumoid, Inc.; John Crane- Houdaille, Inc.; Raymark Industries, Inc. Third Party Defendants. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Robert Elkin Payne (David Craig Landin, Deborah M. Russell, Kenneth F. Hardt, McGuire, Woods, Battle & Booth, Richmond, Va., on brief), for defendant-appellant.
William Beverly Poff (James W. Jennings, Jr., Bradley W. Fitzgerald, D. Stan Barnhill, Frank K. Friedman, Woods, Rogers & Hazelgrove, Roanoke, Va., on brief), for defendant-appellee.
Before WIDENER, PHILLIPS, and ERVIN, Circuit Judges.
The Celotex Corporation appeals from the judgment of the district court granting the motion of the Norfolk & Western Railway Company for indemnity against Celotex. We are of opinion that the district court erred, and we reverse.
The original plaintiff in this case, Cecil Wingo, Sr., sued N & W and various manufacturers (including Celotex) to recover damages for injuries incurred due to his exposure to asbestos while employed as a laborer for N & W. Celotex sold to the N & W the asbestos which injured Wingo. After a jury trial, Wingo was awarded $200,000 on his claim against N & W; 1 his claim against the manufacturers was found to be barred by the statute of limitations. 2 However, the jury also found that the manufacturers had breached an implied warranty of merchantability by failing to warn N & W of the dangers of asbestos products sold to N & W. This breach of warranty forms the basis for N & W's cross-claim for indemnity against the manufacturers. The district court entered judgment only against Celotex on the cross-claim since there was no finding of exposure as to any of the other manufacturers. 638 F.Supp. 107 (W.D.Va.1986).
The jury, in its special verdict, found that N & W knew of the hazard that its employees' exposure to asbestos dust could cause lung disease; 3 that it knew of measures to prevent harmful exposure of its employees to asbestos dust and knew that such measures should be used; 4 that it failed to maintain a reasonably safe place to work; that it failed to provide reasonably safe tools and equipment with which to perform the work; that it failed to adequately train the workers; that it allowed unsafe work practices to become the standard practice; and that it failed to eliminate or control dust exposure hazards. It found that the negligence of the N & W was a contributing cause of the asbestos injury or disease of Wingo. On instructions from the court that in order to find a breach of implied warranty of merchantability by Celotex, it must find "the N & W damaged by the defect," it found that Celotex had breached an implied warranty of merchantability by a failure to warn the N & W of the hazards of asbestos, thus rendering the product defective.
There was no other damage to the N & W involved in the case except the injury to Wingo, so the jury found beyond question that both N & W's negligence and the breach of warranty of Celotex contributed to Wingo's injury. These facts stand as true on appeal.
On this set of facts, we must determine whether or not N & W is entitled to recover from Celotex on an implied right of indemnity. There is nothing in the record and no claim that any express contractual right of indemnity exists. We decide this case under Virginia law under Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), but there are no Virginia cases directly on point, so we decide the case upon our opinion as to what the Virginia Supreme Court would decide if the case were presented to it. Commissioner v. Estate of Bosch, 387 U.S. 456, 465, 87 S.Ct. 1776, 1782, 18 L.Ed.2d 886 (1967).
The general law is that where a supplier of chattels supplies a dangerously defective chattel to a buyer for the use of another and both have become liable to the user on account of the use of the product, an implied right of indemnity in favor of the buyer against the supplier is usually implied. See Restatement of Restitution Sec. 93(1). An exception to this rule is made, however, where the party seeking indemnity has been guilty of an independent act of negligence which also is a cause of the user's injury. In such a case, the supplier has no duty of indemnification to his purchaser. Rabatin v. Columbus Lines, Inc., 790 F.2d 22 (3d Circuit 1986).
It is apparent that, following this rule which we perceive to be the general law which would be followed in Virginia, N & W would have no right to the indemnity it claims. N & W asserts that such an exception for negligence does not exist and, in the alternative, argues that in any event its conduct did not amount to active negligence but was merely passive. It relies on two cases for the proposition that its negligence should not bar an action for implied contractual indemnity, Ryan Stevedoring Co. v. Pan-Atlantic S.S. Corp., 350 U.S. 232, 76 S.Ct. 232, 100 L.Ed. 133 (1956), and General Electric Co. v. Moretz, 270 F.2d 780 (4th Cir.1959), cert. den. 362 U.S. 964, 80 S.Ct. 593, 4 L.Ed.2d 545 (1960).
In Ryan, a stevedore was injured in the unloading of a ship as result of a negligent loading of the ship by his employer, Ryan, at a previous port of call. The stevedoring company had a contractual obligation to load and unload the ship at both ports. The ship had the right, however, to supervise and reject the storage of the negligently loaded cargo and had not done so. The stevedore sued and was awarded a judgment against the shipowner, which sued the stevedoring company, claiming a right of indemnity. The Court held that such a right of indemnity existed because of the contract between the stevedoring company and the shipowner, based upon the stevedoring company's "purely consensual obligation owing to the shipowner to store the cargo in a reasonably safe manner." 350 U.S. at 131-32, 76 S.Ct. at 236-37 (italics in original). It held that the right of indemnity arose out of the essence of the stevedoring company's contract and was "not a quasi-contractual obligation implied in law or arising out of a non-contractual relationship." 350 U.S. at 133, 76 S.Ct. at 237. The court continued that it was a warranty of workmanlike service comparable to a manufacturer's warranty of the soundness of its manufactured product. It further held that the stevedoring company "... as the warrantor of its own service, cannot use the shipowner's failure to discover and correct the contractor's own breach of warranty as a defense." 350 U.S. at 134-35, 76 S.Ct. at 237-38. Ryan was decided under admiralty law. In Moretz, General Electric had improperly loaded a trailer owned and operated by Mason & Dixon Lines, a common carrier. The trailer was loaded on the premises of General Electric and delivered by a pickup driver to the Mason & Dixon terminal. That driver reported to the officials in charge of the terminal that the load had not been properly braced. Despite this, Mason & Dixon, as it was its duty so to do, did not brace the load. Shortly after the trailer left the terminal in shipment, the load shifted and, on that account, the driver of the truck was injured and sued General Electric for its negligence. ...
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